Doubling Of Grants To UN Food Aid Agency Urged

“Donations to the UNs' World Food Program (WFP) must double to secure aid for those pushed into poverty by rising food and fuel prices and to compensate for higher procurement costs, a report warned yesterday.

The UK parliament's International Development Committee said that significant increases to the WFP's budget would probably be needed in the short term and sustained over the years. ‘The usual annual total of $3 billion in voluntary contributions may need to double.’ Last year, the WFP received donations of $2.7 billion, up from $1.7 billion in 1998. After mounting an appeal this year, the WFP received $2.6 billion in the first six months of 2008 and is likely to need about $6 billion.

The report is the first to look at the WFP's future financial needs. It suggests that the Rome-based agency must sustain over the medium term this year's emergency appeal for extra funds. Although the WFP is likely to raise enough money this year, it is unclear whether it could continue to do so in subsequent years. …” [The Financial Times (UK)/Factiva]

IMF Warns Of Currency Mismatches

“The euro is overvalued, even though the dollar is close to its equilibrium value, the International Monetary Fund (IMF) said yesterday, warning that new exchange rate misalignments could be emerging. ‘In our view the euro is now overvalued relative to medium-term fundamentals, while the currencies of many current account surplus countries remain substantially undervalued,’ John Lipsky, the IMF's first Deputy Managing Director, said in a speech. …

But while the number two IMF official welcomed the orderly decline in the dollar to date, and said it would make a positive contribution to moderating global economic imbalances, he warned that on its own, it would not be enough to bring the world economy into better balance. …” [The Financial Times (UK)/Factiva]

WSJ adds that “…Lipsky predicted that record energy prices will continue to push up surpluses in oil-exporting countries. ‘New misalignments may be emerging and risks may be shifting,’ he said. ‘We accept that large imbalances may be with us for longer than we had originally envisaged.’ …

Lipsky expressed confidence that ‘notwithstanding the dramatic claims by some,’ the dollar would retain its role - albeit somewhat diminished - as the world's reserve currency.” [The Wall Street Journal/Factiva]

Dow Jones notes that “…Thus, policy changes that are necessary to right the imbalances ‘will need to be implemented flexibly as circumstances have changed, and we accept that large imbalances may be with us for longer than we had originally envisaged,’ he said.

This is the latest of several major addresses Lipsky has given this year on challenges facing the world economy, with the Fund seeking to reassert its global watchdog role as demand for its lending resources has declined. …” [Dow Jones/Factiva]

ASEAN, Partners Agree To Tackle Food Crisis, Oil Price Spikes

“Foreign ministers of the 10 ASEAN nations and their counterparts from China, Japan and other key dialogue partners agreed Tuesday on the need to improve crop productivity in the region to overcome the looming food crisis and create a mechanism to deal with rapidly growing energy consumption amid soaring fuel prices. …

[They] agreed to launch a $3 million ASEAN-plus-three Cooperation Fund, in line with plans endorsed by the nations' leaders last November under the 2nd Joint Statement on East Asia Cooperation, the official said. The fund will finance cooperation in such fields as politics and national security, business and finance, energy and the environment, and social development as stipulated under the 10-year guideline. …” [Kyodo News (Japan)/Factiva]

Xinhua adds that “…During the one-day meeting, the ministers discussed the growing challenges of rising oil and food prices, calling for greater information sharing and collaboration among member countries, said a chairman's statement of the so-called ASEAN-plus-three meeting issued late Tuesday night. They also concurred on the importance of joint research efforts to improve food productivity, of providing clean energy resources for developing nations through technological transfers, and ensuring that the production of biofuels does not disrupt the food chain.

The ministers also expressed their concerns over the global financial situation. They looked forward to further progress in the multilateralization of the Chiang Mai Initiative and the Asian Bond Markets Initiative. …” [Xinhua/Factiva]

Jiji Press notes that “Japan will provide additional aid to members of the ASEAN to tackle bird flu, Foreign Minister Masahiko Komura said Wednesday. The package will include supplies of Tamiflu for 500,000 people and protective masks. …

After Japan ratified its economic partnership agreement with ASEAN during its ordinary parliamentary session earlier this year, Komura urged ASEAN member countries to move ahead with ratification so that the pact can come into effect by the end of this year. Foreign ministers from ASEAN indicated that they will work to put the EPA into effect at an early time. ...” [Jiji Press (Japan)/Factiva]

WTO To Seek Breakthrough With Smaller Group Meeting

“A small number of trade powers will hold a meeting Wednesday afternoon to discuss market access for nonfarm products and other issues to seek a breakthrough in the stalled talks of the World Trade Organization, WTO Director General Pascal Lamy said Tuesday. 

The move comes after ministers from about 30 economies failed to narrow gaps Tuesday over trade liberalization in the agricultural and nonfarm sectors after a seven-hour intensive gathering dubbed the ‘Green Room’ in Geneva. …” [Kyodo News (Japan)/Factiva]

FT reports that “The US on Tuesday made the first significant move in this week's meeting of trade ministers in Geneva, cutting its proposed ceiling for farm subsidies to $15 billion a year. The move would reduce US farm subsidies deemed to distort international trade by about $2 billion compared with the current offer in the so-called ‘Doha round’ of trade talks, much lower than the present ceiling of about $48 billion. …But the offer did not spark rapid progress in the talks. A seven-hour negotiating meeting last night involving several dozen ministers ended with participants saying there had been little progress. …” [The Financial Times (UK)/Factiva]

Reuters adds that “…India, Brazil and other big developing countries said Washington had to make deeper cuts before they would offer concessions of their own because the ceiling represented virtually double the level of US farm subsidies last year. …Officials said talks on getting developing countries to open up their markets in manufactured goods were heated and trade officials said they were extending hotel reservations into next week with talks likely go beyond Saturday's planned end date. …” [Reuters/Factiva]

Basel Committee To Tighten Rules On How Banks Calculate Risks

“Global banking supervisors are seeking to close a regulatory loophole that made it easier for banks around the world to own the complex assets that have caused huge losses during the current credit crisis.

A proposal yesterday by the Basel Committee on Banking Supervision could overhaul the way banks calculate risk on their trading books and make it more costly to hold the kind of structured debt products that brought losses to banks such as UBS, Citigroup and Merrill Lynch. …The committee is seeking industry comment on its proposal but plans to issue an interim version of the new requirement - an Incremental Risk Charge (IRC) - later this year and have the final version ready by January 2010.

The move is part of the wide-ranging regulatory response to the credit crisis and the instability it has caused to the financial system and the real economy. …” [The Financial Times (UK)/Factiva]

Reuters adds that “Bigger banks will have to set aside more capital to cover a wider range of risks on their trading books under plans published on Tuesday to apply lessons learnt from the subprime crisis. …The guidelines will force banks to top up this basic capital if they are also exposed to other kinds of risks. These include potential losses due to a credit rating agency downgrade or a loss due to a change in the price of an equity instrument. The big write downs by banks were mainly due to massive downgrades to securitized assets rather than defaults in those securitized assets. …

Public consultation runs until October and the committee will publish definitive guidelines by the end of the year. The changes will be mandatory for all banks which have such assets on their trading books. In practice these are usually only the larger international banks. In the EU the guidelines will be included in a revision of the bloc's capital requirements directive. …” [Reuters/Factiva]

Commentary: Japan Can Help Steer Continent's Development AND Also in This Edition… Briefly Noted…

A commentary by World Bank Vice President for Africa, Obiageli Katryn Ezekwesili published in Kenya weekly The East African writes “Two events this year - the recent Fourth Tokyo International Conference on African Development (TICAD IV) and the G8 Summit in July - presented unique opportunities for Japan to demonstrate its fruitful partnership with the African continent and global leadership on sustainable development. …

Japan's dramatic success in transforming its post-war economy and its emergence as an industrial superpower hold powerful lessons for African development. Japan's formidable technological prowess and financial muscle can address critical development deficits, in Africa, and beyond. Going forward, two areas - agriculture and infrastructure development - come to mind where Japanese interventions could deliver lasting development results.

Agriculture is a life-line of African economies, accounting for one-third to one-half of the gross domestic product of many nations. …For many Africans, rice is the staple food. With Japanese support, the New Rices for Africa (Nericas) program is spelling hope. …Cutting-edge agricultural technologies are necessary for raising farm productivity, and Japan has a lot to offer in this area, including support for agricultural research and development. …

The second priority area is infrastructure development. Africa faces huge challenges in this area. Poor infrastructure is weakening Africa's ability to provide its citizens with decent education and health services, and preventing farmers from accessing lucrative regional and overseas markets.

Japan's massive and unparalleled domestic investments in infrastructure and water resources management offer useful lessons for Africa. The fact that only one in four Africans has access to electricity, and less than five percent of Africa's hydropower potential has been tapped shows the great potential for infusing technology-led private-sector investment in this area.

Japan's focus on sustained investments in hydraulic infrastructure to regulate river flows, improve water and sanitation services in booming urban centers, providing reliable irrigation, and improving flood control offer important lessons for all developing countries.

Japan has long been a steadfast supporter of the International Development Association (IDA), the World Bank's concessional financing arm for the world's poorest countries. Thanks also to Japan's support the 15th replenishment of IDA netted $42 billion to finance the fight against poverty over the next three years.

Some 40 African heads of state came together for the TICAD meeting hosted by the government of Japan. The world is at the mid-point in the journey to achieve the Millennium Development Goals (MDGs) that have a target date of 2015. Sub-Saharan Africa will not achieve the first MDGs of halving poverty and hunger by 2015. Eighty percent of countries in the region show poor progress on improved sanitation, and 44 per cent of the population still lacks access to clean water. The region lost 9 per cent of its forest cover between 1990 and 2005. And with over 22 million people infected with the HIV virus, sub-Saharan Africa is tragically the global epicenter of the disease.

These are the hard facts. But there is also a place for human imagination, to think beyond the narrow confines of problems, marshal the power of collective action, and grasp new opportunities. In that sense, the storied locales of Yokohama and Hokkaido Toyako could well serve as the launching pad for new initiatives in international development co-operation, and become the new ‘Kyoto’ of focused poverty reduction efforts.

It is my fervent hope that by working together, Japan, the World Bank, and the international community can lay the foundations for strengthened development co-operation to achieve the MDGs, and help Africa reach its full potential. That must be the enduring legacy of TICAD and the G8.” [The East African (Kenya)/Factiva]

Also in This Edition… Briefly Noted…

The World Bank for the first time has disbursed a loan in one of Africa’s local currencies .  The 58.2 million South African Rand (ZAR) loan is to support the Government of Namibia in its educational improvement program. [The Financial (Georgia)/Factiva]

World Bank Managing Director Ngozi Okonjo-Iweala on Tuesday praised Angola for good governance, fast economic growth and maintenance of peace, stability and security.  [Xinhua/Factiva]

Roundtable talks on the construction of the World's second largest and Africa's largest power project on the River Congo kick off today in Kinshasa. Energy and infrastructure ministers from the Great Lakes Region and other African countries as well as African Union officials will meet partners of the Grand Inga Project set to begin in 2010. [The New Times/All Africa/Factiva]

The Government of the Democratic Republic of Congo denounced Tuesday the embezzlement of more than $1.3 billion after an audit carried out among regulated financial and public enterprises, the cabinet of the Prime Minister announced. [Agence France Presse/Factiva]

Cape Verde became the World Trade Organization's 153th member on Wednesday [Reuters/Factiva]

Oil company City Oriente and the Ecuadorean government have agreed to try to settle their contract dispute by July 31, a company spokesman said Tuesday. … City Oriente, based in Panama and backed by US investors, filed an arbitration claim at the World Bank's International Center for the Settlement of Investment Disputes, or ICSID, against the Ecuadorean government in 2006, alleging that changes in windfall profit tax rates violated the terms of its contract. [Dow Jones/Factiva]

Inter-American Development Bank’s board is set today to approve proposals to provide a 15-year loan of $260 million to three new ethanol plants being built by Santa Elisa Vale do Rosario, a Brazilian company, and US private equity groups. [The Financial Times (UK)/Factiva]

The Caribbean could suffer economically if a proposed free trade agreement between several regional countries and the European Union is signed because of damaging flaws in the deal, according to Guyana's President Bharrat Jagdeo. [The Financial Times (UK)/Factiva]

The UN is to stop flying in aid to Myanmar next month, forcing relief agencies to find another way to bring in vital supplies to cyclone survivors, its logistics head told AFP Wednesday. The UN's World Food Programme will stop ferrying aid between Thailand's Don Muang airport and Myanmar's main city Yangon from August 10, and withdraw five helicopters from use. [Agence France Presse/Factiva]

Urban Chinese are overwhelmingly happy with their country's economic and political progress - and register higher levels of national contentment than those of other nations, according to a large-scale international public-opinion survey by the Pew Research Center. 82 percent of the Chinese polled by Pew  say the economic situation is good, while 86 percent say they are satisfied with the direction the government is taking the country. [The Wall Street Journal Asia/Factiva]

World Bank funded Uttarakhand Rural Water Supply and Sanitation Project aims to provide safe drinking water to 1.2 million people in 20,000 habitations in India by 2012. It makes Uttaranchal the first State in the world to adopt sector- wide common policies for improving the delivery of its water supply and sanitation services to rural areas, reports The World Bank. [The Pioneer/Factiva]

A report by the Bank's Independent Evaluation Group said it was crucial for the Bank and its partners to intensify their focus on measurable environmental protection, given rising vulnerability to environmental risks and the increasing flow of financing for projects related to climate change. [The New York Times/Factiva]

International donors have agreed to provide $1.3 billion in emergency food financing for Bangladesh in one of the clearest indications that soaring food prices are threatening livelihoods in poorest countries. The funding package, which includes contributions from the Asian Development Bank and the World Bank, is also recognition of the particular difficulties of Bangladesh. [The Financial Times (UK)/Factiva]

President Hugo Chavez of Venezuela and President Dmitri A. Medvedev of Russia declared Tuesday that their countries would more closely coordinate their actions on global oil and gas markets and that they would work together on foreign policy. [The New York Times/Factiva]